For more than a century, Canadian-made Gray Tools crossed the border into the United States. That business relationship has now run into a barrier the Brampton manufacturer says it cannot simply price around.
Gray Tools president Gary Nuttall says U.S. sales of the company’s Canadian-made products stopped after a 50% American tariff took effect. The family-owned manufacturer is now dealing with pressure from several directions: lost American business, more expensive inputs, Canadian retaliatory measures and customers delaying purchases amid trade uncertainty. The experience of one Ontario toolmaker offers a close-up view of what happens when tariff policy moves from government announcements to factory floors, purchase orders and long-established customer relationships.
A U.S. Market Built Over a Century Disappeared Almost Overnight
Gray Tools is not a newcomer trying to crack the American market. The company traces its origins to Toronto in 1912, when founder Alex Gray established the business, and says it opened a U.S. branch in Buffalo, New York, just five years later in 1917. Manufacturing eventually shifted to Brampton, where the company has operated since 1970. That makes the sudden interruption particularly striking: this was a commercial relationship that had survived recessions, wars and major changes in North American manufacturing.
Nuttall said the change came abruptly once the new duty was imposed. According to the company, its U.S. sales of Canadian-made tools stopped after the 50% tariff took effect, effectively closing a market Gray had served for more than 100 years. Gray has not publicly released detailed sales figures showing how much revenue disappeared, so the scale of the financial loss cannot be independently calculated. What is clear is that the company itself describes the change not as a gradual slowdown, but as an abrupt halt in American sales of the affected Canadian-made products.
The 50% Tariff Lands Directly on Products Gray Makes
The U.S. measure is unusually significant for a hand-tool manufacturer because the affected tariff lines include products central to the industry. Covered categories include non-adjustable and adjustable hand-operated wrenches, socket wrenches, certain hammers, other hand tools and sets containing several types of tools. Those are not obscure sidelines for a company whose catalogue revolves around professional wrenches, sockets, striking tools, pliers and equipment for industrial maintenance.
The additional U.S. duty became effective on August 22, 2026, following a short suspension of measures announced under Section 338 of the Tariff Act of 1930. Washington said it imposed the duties in response to what it considers discriminatory Canadian treatment of American commerce. Whatever the political justification, the arithmetic for an importer is severe. A 50% additional tariff can add $50 in duty to $100 of customs value before other transportation, distribution or commercial costs are considered. That creates a pricing gap substantial enough to make even an established Canadian supplier difficult for a U.S. purchaser to justify.
CUSMA Compliance Does Not Provide an Escape Route
Normally, one of the biggest advantages enjoyed by Canadian manufacturers is preferential access to the U.S. under the Canada-United States-Mexico Agreement. A product that satisfies the agreement’s rules of origin can generally move across the border without the ordinary customs duties that apply to many imports from other countries. The Section 338 measures break with that familiar model.
Both U.S. and Canadian government guidance state that the 50% duties apply to covered Canadian goods even when those products would otherwise qualify for preferential treatment under CUSMA. For Gray Tools, that distinction is critical. A manufacturer can invest in Canadian production, comply with North American sourcing rules and still find its product facing a massive additional charge at the U.S. border. It also complicates long-term business planning. Companies built supply chains around the expectation that satisfying CUSMA rules would preserve access to the continent’s largest market. The current tariffs demonstrate that preferential trade rules do not necessarily protect a product from separate trade actions imposed under other U.S. authorities.
Gray Says It Is Being Squeezed From Both Sides of the Border
Losing U.S. sales is only one part of Gray Tools’ problem. Nuttall says Canadian retaliatory tariffs have increased the cost of American steel the company had been buying, while other Canadian surtaxes affect some imported steel-containing products. In other words, the business can face higher costs when sourcing certain inputs while simultaneously confronting a tariff wall when trying to sell finished Canadian goods in the United States.
Ottawa’s response to the latest U.S. measures took effect September 8. Canada imposed counter-tariffs of 15%, 25% or 50% on selected American products covering about $27.6 billion in imports, with steel among the sectors targeted. Federal guidance shows that some U.S. steel and aluminum goods now carry Canadian duties of 25% or 50%. There are exemptions and remission programs for particular goods and industrial uses, so the impact varies by product. For a manufacturer such as Gray, however, every new tariff classification creates another purchasing decision: absorb the cost, find another supplier, seek relief or redesign the supply chain.
The Response Is to Bring More of the Supply Chain Closer to Home
Gray Tools says the tariff conflict has accelerated its effort to buy more raw materials from Canadian suppliers. The objective is partly defensive. Domestic sourcing can reduce exposure to border measures and currency movements while supporting the local industrial network needed to keep manufacturing in Brampton. It cannot replace lost American customers, but it can make production less dependent on materials that may suddenly become more expensive because of retaliation.
There is historical precedent inside the company. Gray says it bought a controlling interest in Welland-based Haun Drop Forge in 1938 to secure a dependable source of forgings. More recently, the company has also been investing in its Brampton operations. In June 2026, Gray added a second Takumi VC1200 vertical milling machine, a move reported to double milling capacity on that equipment platform and bring more machining work in-house. The machine is intended for products including large combination, non-striking and striking-face wrenches. That investment came only months before the latest tariff escalation, illustrating how quickly the assumptions behind manufacturing expansion can change.
Uncertainty Is Becoming Almost as Costly as the Tariff Itself
A factory can calculate a tariff rate. What is harder to put into a spreadsheet is the effect of customers deciding to wait. Gray says some distributor partners and end users have become more cautious about purchases and investment because they do not know how long the trade restrictions will remain in place. Its customers include industries such as mining, utilities, railways and industrial plants, where maintenance spending can involve large inventories of professional tools and equipment.
That experience is consistent with broader evidence from the Bank of Canada. Its third-quarter 2026 Business Outlook Survey found that renewed Canada-U.S. trade tensions were weighing on firms’ export expectations and investment plans while increasing cost pressures. The Bank also reported that businesses were adapting by changing suppliers, improving efficiency, exploring new markets and, in some cases, reducing capacity. Roughly half of firms experiencing unusually large cost increases said they expected to pass at least some of those increases to customers. Gray is trying to limit that outcome, but a manufacturer can only absorb higher costs for so long before margins or prices are affected.
Gray’s Problem Reflects Canada’s Larger Dependence on the U.S.
The impact of a closed American market is magnified by the structure of Canadian trade. Statistics Canada reported that 71.7% of Canada’s merchandise exports went to the United States in 2025. That was already down from 75.9% in 2024, yet it still meant that more than seven dollars out of every ten in Canadian merchandise exports depended on the U.S. market. For specialized manufacturers, replacing those customers in Europe, Asia or elsewhere is rarely immediate.
Tools are part of that cross-border trade. United Nations COMTRADE data reported through Trading Economics put Canadian exports to the U.S. of tools, implements and cutlery of base metal at roughly US$458 million in 2025. The total includes much more than Gray’s product line, but it demonstrates that tools move across the border in meaningful volumes. Hand tools, vices and clamps accounted for about US$63 million, while hand-operated spanners, wrenches and interchangeable sockets contributed several million more. Gray’s individual sales stoppage is therefore one example of a broader industrial relationship vulnerable to abrupt tariff changes.
Cutting Quality Would Undermine the Product Gray Is Trying to Protect
One obvious response to a 50% tariff would be to search aggressively for cheaper materials or lower-cost production. Gray says that is not the direction it intends to take. Nuttall says its quality system and warranty have remained unchanged despite tariff pressure and that the company has maintained ISO 9001 certification since 1998. For an industrial supplier, those standards matter because many of its tools are used in workplaces where failure can stop equipment, delay maintenance or create safety risks.
Gray’s product documentation provides an example of how detailed those requirements can become. Its torque-tool catalogue states that torque wrenches are tested at the factory and manufactured to standards including ANSI B107.14 and ISO 6789. Calibration and accuracy matter far more to a technician tightening a critical fastener than whether the wrench was a few dollars cheaper. The commercial challenge is therefore uncomfortable: Gray has to contain costs sufficiently to remain competitive without stripping away the material, machining and testing standards that give a professional-grade tool its value in the first place.
The Company Has Survived Disruptions Before, Though This One Is Different
Gray’s corporate history contains plenty of difficult periods. The company says it lost money for eight consecutive years during the Great Depression yet continued developing products, including combination wrenches, reversible ratchets and torque wrenches. During the Second World War, the Canadian Armed Forces became its largest customer and women took factory positions as men left for military service. Those stories show a manufacturer repeatedly changing what it produced and how it operated as outside conditions shifted.
One of the company’s most memorable stories involves a Gray wrench rather than a balance sheet. Gray recounts that tools aboard the merchant vessel Colomar sank after the ship was torpedoed near Nova Scotia in 1942. When the wreck was salvaged decades later, a Gray spanner wrench was reportedly recovered intact and still usable; the company says it remains in its Brampton office. Such stories do not solve a modern trade dispute, but they explain why management talks about the current tariff fight in terms of endurance. The difference today is that producing a competitive tool is not enough if the border itself makes selling it uneconomic.
Reopening the U.S. Market May Require a Political Solution
Gray Tools can change suppliers, increase domestic machining, control packaging expenses and search for customers in other countries. None of those measures, however, removes a 50% U.S. tariff. Nuttall has offered no timetable for when the company’s American sales of Canadian-made tools could resume. The decision depends largely on trade policy rather than the performance of the factory in Brampton.
The wider policy environment also remains unsettled. The Section 338 tariffs are facing legal challenges in the United States, including a lawsuit filed in October by an American importer seeking to overturn the measures. Ottawa, meanwhile, has announced billions of dollars in additional assistance aimed at Canadian workers and companies affected by U.S. tariffs. Those developments may change the landscape, but they provide little certainty for a manufacturer deciding what to buy, make or invest in today. Gray’s stated plan is to continue manufacturing in Canada. The harder question is whether a commercial relationship stretching back to 1917 can be restored before companies on both sides permanently redesign their supply chains around a border that has become far more expensive to cross.
